I would not go that far, but in any case it has not been proven that these subsidies are effective, provide benefits and have an impact on the competitiveness of businesses. On the contrary, when you subsidize a company in a particular industry, the subsidies allocated under this $3.3 billion are unfair to the others who cannot benefit from them. And they still want to cut spending on the backs of the most disadvantaged people but do not even mention eliminating these $3.3 billion in corporate subsidies.
Do you think that is right? Is it right to cut unemployment insurance, welfare and post-secondary education while the finance committee and others still continue to leave these $3.3 billion in direct corporate subsidies? That was our third suggestion then to the Minister of Finance.
We also suggested that the Liberal government withdraw immediately from the Hibernia project, and we are no longer the only ones saying so. Almost everywhere, people are speaking out against the continuing waste which has already swallowed up $3 billion in direct and indirect spending, loan guarantees and so on from the federal government. This year we have been told about an additional $250 million for a project that will never make a profit, that relies on an increase in global oil prices, when all forecasts to this day call for an even greater reduction in the price of a barrel of oil than we are now experiencing.
Why do they insist on the federal government, Quebec, Ontario and other Canadian provinces getting involved in a project that will never be profitable? And if it is profitable, why is the private sector not doing all the investing? Why must the federal government continue to invest hundreds of millions of dollars every year if the project is supposedly profitable? The 1960s and 1970s are over. Let us look at the state of government finances. Even my Liberal colleague, the chairman of the finance committee, mentioned earlier that government finances are in a state of crisis.
Despite the serious problems, they continue to spend money on this project, perhaps for political considerations, thus contradicting the Prime Minister's position during the vote on the Hibernia project. It is impossible to understand. If this is not political expediency, I wonder what it is. That was our fourth suggestion to the Minister of Finance, which has not been acted on to this day.
We also suggested to the finance minister that $1.6 billion be cut from the National Defence budget in response to last year's request by the official opposition that this budget be slashed by 25 per cent. Again, this suggestion was not followed up.
We also asked the finance minister to reduce the government's operating expenditures by tackling mismanagement and widespread waste. There are many examples of waste and inefficiency, starting with the Auditor General's last report. I will give you just one because I do not want to take up too much time, even if I have unlimited time for this debate. The Department of National Defence is one example that has been popular with all of us for a while, especially since last week, when the Auditor General pointed out cases of gross mismanagement and inefficiency. They always boast that things have been put into order at the Department of National Defence in the recent past, but after reading the Auditor General's last report, we see that this department is a total mess, that it has become a symbol of public affairs mismanagement.
I will quote just a few passages to illustrate what I told you. The Auditor General's report outlines several cases of waste. It says among other things that real property mismanagement at DND costs $100 million a year. Real property mismanagement alone costs $100 million; they throw away all that money while maintaining that the only way to reduce waste and increase
efficiency in public finance management is to cut social programs.
The report also points to waste in the F-18 performance evaluation program. We are told that the program might be ready in 2003, or 20 years after its implementation, and that the automation of the Canadian military police records will have taken 26 years, if the goal of completing the project in the year 2000 is achieved. Imagine, 20 years for the F-18 performance evaluation program, when you think that, after 20 years, an F-18 jet is considered obsolete. And 26 years to automate the Canadian military police records. In my short career, I never thought such delays were possible.
In his report, the Auditor General also says about National Defence that the army, air force and navy have each developed their own information, command and control systems which have little interoperability. Imagine, our national defence is comprised of three forces that should normally interact through office automation and information technologies and systems, but these systems are virtually incompatible. We are told that the three forces have very limited interoperability.
Given the situation in National Defence, one can guess what goes on elsewhere. We have a serious problem because it involves hundreds of millions, or billions of dollars. We read that: "There are plans for future information technology projects with projected costs of $1.2 billion". Mr. Speaker, implementing these projects will cost $1.2 billion, but they are not supported by adequate cost estimates.
In other words, we are spending $1.2 billion to implement technology projects, new technologies, but we have no serious study on the value, efficiency and usefulness of these projects for the future of the three forces of National Defence.
Here is another example, which again concerns the Department of National Defence. The Auditor General writes: "The Department did not have an adequate system in place to assess the cost-reduction potential of information technology projects or to weigh the benefits of cost reduction against other priorities. As a result, the Department has not benefited from at least $700 million in possible savings". Just think! We are talking about hundreds of millions, even billions. But it does not seem to matter. The government prefers to cut spending by targeting the poor and let outrageous situations like that go on.
This is incredible. I am flabbergasted. I was even more outraged last week, when the Auditor General tabled his report because, based on what the other side had been telling us over the last year, we thought that public finances had at least improved somewhat. This is not the case however.
Some measures need to be taken regarding taxation. Until the Liberal government takes concrete action, we will not stop repeating that it must end the unacceptable situation created by family trusts. The government must stop losing hundreds of millions every year by allowing very rich Canadian families-not middle income families, not fairly rich families, but very rich families-to use family trusts to defer for up to 80 years taxes on capital gains.
These very rich families do not use family trusts as an investment tool for future generations, or to help sick or handicapped children and relatives to be financially secure: They use these trusts as a powerful tax planning device. According to some tax experts with an excellent reputation in Canada, such as Sydney Goldstein and Neil Brooks, to whom the Liberals used to listen when they formed the opposition but no longer do so now that they are in office, it is outrageous to maintain these trusts for very rich Canadian families.
They suggest that, through special studies conducted by Statistics Canada, or through data from Revenue Canada or major corporations managing the assets of these family trusts, such as Canada Trust, which is a major contributor to the Liberal Party, the government could obtain sufficient information to make an annual estimate of what family trusts set up for the benefit of very rich families really costs Quebecers and Canadian taxpayers.
During the hearings of the special committee set up to examine family trusts, as openly as possible, as the Minister of Finance put it, the Official Opposition asked Revenue Canada to provide these data. That was two months ago and we are still waiting. Our request has not even been acknowledged. If this is what is meant by transparency, we have a problem, because Liberals and the Official Opposition obviously do not have the same definition of transparency.
Mr. Farber, from the Department of Finance, also told the finance committee that a legislative authority would be needed to collect this information using a tax slip. We have submitted such a request. And again we are still waiting for an answer. Not only did we not get an answer, but I can tell you that, even though they talk about transparency and their will to correct all fiscal inequities, we have not had any co-operation from the Liberal Party or the senior officials of both the Department of Finance and the Department of Revenue. Could it be that these senior officials have been ordered by their superiors not to say anything and not to take any step to collect data on family trusts?
We could also mention all the measures needed to correct the tax situation, including the tax conventions signed, as we said before, between Canada and countries with many tax loopholes. Despite the steps taken by the Minister of Finance in his last budget, a recently released study, carried out, I believe, by Samson & Bélair, says that, in spite of everything, all the government's attempts and all the measures included in the last budget, there are still hundreds of millions of dollars being exchanged between Canadian businesses and their foreign subsidiaries located in tax havens and losses incurred by the subsidiaries being reported in Canada for tax deduction purposes. According to the Auditor General and this Samson &
Bélair study, it is estimated that hundreds of millions of tax dollars are lost this way.
I have a quote here that I would like to read to my hon. colleagues in English, if they will excuse my horrible accent. It says: "The new rules have some merit", meaning the measures taken by the Minister of Finance. "They will most certainly generate ambiguity and uncertainty. Unfortunately, the 1994 proposal did not bring the changes we were all hoping to see".
In other words, the action taken by the finance minister is not enough to prevent tax treaties with countries where corporate tax rates are lower than here, in Canada, countries such as Barbados, Cyprus, Malta and Papua New Guinea, for example.
Because of these tax treaties, businesses, mostly very large corporations, do not pay their fair share of taxes here, in Canada, and we deliberately allow some of these corporations to forego their tax responsibility and to benefit from these tax loopholes, these tax havens, thanks to which they can legally save hundreds of millions of dollars in federal taxes.
We cannot afford these tax conventions any more, especially with countries that are well-known tax havens and where tax loopholes are legion. This is utterly unfair when everyone else is being asked to make sacrifices, from middle-income families to the less-privileged, everyone except these large corporations, which take advantage of the Canadian tax loopholes and the tax breaks deliberately included in the tax treaties signed by Canada and these tax havens.
There is also the whole question of corporate taxes. I tell you this should be examined carefully.
I submit that the recent data from Statistics Canada on the trend of corporate versus individual contributions to the tax base reveal some clear facts. Remember that these data are expressed in real terms, which means that they take 1986 as the reference year. These are real data which take inflation into account. Thus, in 1950, Canadian corporations contributed $3.2 billion to the federal and provincial treasuries. The same data, with 1986 being equal to 100, reveal that in 1992, Canadian corporations contributed $7.4 billion. But the $3.3 billion in subsidies to businesses I was taking about earlier must be deducted from those $7.4 billion.
So, when those $7.4 billion actually paid by corporations to the federal and provincial treasuries are reduced by the $3.3 billion in subsidies, we have exactly the same amount as in 1950. The tax burden of companies did not increase in real terms but, for individuals, that burden went up from $3.3 billion to $87.6 billion.
So there is a problem, and I can tell you that it is probably related to the tax breaks used by very large businesses. The Ontario Tax Equity Committee pointed out in 1990 that Canada's large businesses can use about 60 tax breaks that allow them not to pay their fair share of federal taxes even though we could require them to do so. This has been going on since 1950. And I am not talking here about very small businesses or small and medium size businesses, which do their job. If you look at the data, you will see that they contribute, as good corporate citizens do, to the federal and provincial treasuries. I am not talking about businesses in my area.
Last week, I was talking to the owner of Grégoire & Fils, a business that does research and development work in the farm equipment sector in my riding. I am not talking about his business. I am not talking either about Dutailier Inc. and Lacasse, two businesses that export furniture outside the country without any grants. I am not talking about these small and medium size businesses that create hundreds and even thousands of jobs, because that is what small and medium size businesses do, they create thousands of jobs.
I am not talking about these businesses that perform their tax duties and contribute to economic growth, job creation and regional development. I am not talking either about a businessman like my friend Jean-Marc, from the south shore, who has to face very fierce competition from large multinationals in the steel equipment sector. He creates 43 jobs and pays his fair share of taxes. I am referring instead to very large companies who take advantage of measures that are legal, but are sometimes borderline measures, to prosper at the expense of a deteriorating Canadian fiscal situation, and to companies that use legal measures to avoid paying their share of taxes to federal and provincial governments.
For a year now, I have been examining the Canadian tax system more seriously and specifically than previously, and I find it is distorted. It is so distorted that last week, my friend Léo-Paul Lauzon, a well-known tax expert in Quebec, sent me a newspaper clipping he found in La Presse , I believe. I know I cannot show that clipping, but it was found in classified ads and says in big print:
Tax losses for sale''. The ad reads:Our client, a cosmetics distributor with significant tax losses and undervalued assets, is looking for a buyer who could use those tax losses. Confidentiality guaranteed. Please, contact so and so-I will not mention the name of the agency-number so and so''. In other words, our system is so distorted that we can now sell tax losses. Tax losses are sold like shoes, eggs or chicken. They are sold to companies that want to reduce their annual income.